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Test your basic knowledge |
AP Microeconomics
Start Test
Study First
Subjects
:
economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run
Luxury
Shutdown Point
Determinants of Labor Demand
Price Ceiling
2. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Marginal Product of Labor (MPL)
Price discrimination
Price inelastic demand
Price elasticity
3. The mechanism for combining production resources - with existing technology - into finished goods and services
Increasing Cost Industry
Marginal Benefit (MB)
Subsidy
Production function
4. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry
Negative externality
Average Fixed Cost (AFC)
Oligopoly
Relative Prices
5. The total quantity - or total output of a good produced at each quantity of labor employed
Price elasticity
Law of Demand
Accounting Profit
Total Product of Labor (TPL)
6. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Market Economy (Capitalism)
Derived Demand
Determinants of Labor Demand
Price Elasticity of Supply
7. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
Price floor
Shortage
Marginal Cost (MC)
Relative Prices
8. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply
Law of Supply
Determinants of Supply
Economic Profit
Inferior Goods
9. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage
Marginal Resource Cost (MRC)
Total variable costs (TVC)
Decreasing Cost industry
Normal Profit
10. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Unit elastic demand
Private goods
Marginal Productivity Theory
Break-even Point
11. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good
Market Equilibrium
Negative externality
Cross-Price Elasticity of Demand
Perfectly competitive long-run equilibrium
12. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good
Marginal Analysis
Perfectly competitive long-run equilibrium
Resources
Public goods
13. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Utility Maximizing Rule
Oligopoly
Constant cost industry
Profit Maximizing Rule
14. The most desirable alternative given up as the result of a decision
Absolute Advantage
Consumer surplus
Opportunity Cost
Four-firm concentration ratio
15. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good
Specialization
Accounting Profit
Perfectly competitive long-run equilibrium
Spillover costs
16. The sum of consumer surplus and producer surplus
Total Welfare
Law of Increasing Costs
Law of Demand
Resources
17. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage
Break-even Point
Monopoly long-run equilibrium
Market Equilibrium
Price Ceiling
18. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand
Perfect competition
Oligopoly
Short run
Cartel
19. The price of a good measured in units of currency
Absolute prices
Accounting Profit
Diseconomies of Scale
Marginal Revenue Product (MRP)
20. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income
Price Ceiling
Determinants of Demand
Marginal tax rate
Total Revenue Test
21. Ei = (%dQd good X)/(%d Income)
Incidence of Tax
Income Elasticity
Allocative Efficiency
Law of Demand
22. Models where firms agree to mutually improve their situation
Collusive oligopoly
Absolute prices
Shutdown Point
Profit Maximizing Resource Employment
23. Occurs when LRAC is constant over a variety of plant sizes
Income Effect
Negative externality
Spillover benefits
Constant Returns to Scale
24. Ed < 1
Marginal Analysis
Average Product of Labor (APL)
Price elastic demand
Price inelastic demand
25. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic
Private goods
Average Fixed Cost (AFC)
Incidence of Tax
Utility Maximizing Rule
26. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)
Income Effect
Cartel
Average Total Cost (ATC)
Economies of Scale
27. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Economic Profit
Complementary Goods
Resources
Law of Diminishing Marginal Utility
28. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur
Perfectly inelastic
Short run
Explicit costs
Opportunity Cost
29. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources
Normal Profit
Demand for Labor
Unit elastic demand
Law of Supply
30. Costs that change with the level of output. If output is zero - so are TVCs.
Marginal Resource Cost (MRC)
Total Welfare
Total variable costs (TVC)
Fixed inputs
31. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF
Non-collusive oligopoly
Normal Goods
Allocative Efficiency
Average Total Cost (ATC)
32. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Law of Increasing Costs
Long Run
Determinants of Labor Demand
Production function
33. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient
Absolute prices
Productive Efficiency
Determinants of Labor Demand
Unit elastic demand
34. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Incidence of Tax
Monopolistic competition
Price elasticity
Unit elastic demand
35. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.
Cartel
Profit Maximizing Rule
Marginal Productivity Theory
Economies of Scale
36. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital
Fixed inputs
Monopoly
Diseconomies of Scale
Oligopoly
37. A good for which higher income decreases demand
Price elasticity
Collusive oligopoly
Inferior Goods
Marginal Revenue Product (MRP)
38. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand
Market power
Natural Monopoly
Economies of Scale
Monopolistic competition long-run equilibrium
39. Ed = 0 - no response to price change
Absolute Advantage
Total Revenue
Variable inputs
Perfectly inelastic
40. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic
Average Product of Labor (APL)
Implicit costs
Total Revenue Test
Total Revenue
41. When firms focus their resources on production of goods for which they have comparative advantage
Excise Tax
Negative externality
Specialization
Determinants of elasticity
42. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit
Monopoly long-run equilibrium
Positive externality
Constant Returns to Scale
Short run
43. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits
Cartel
Luxury
Non-collusive oligopoly
Market Equilibrium
44. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials
Determinants of Supply
Natural Monopoly
Derived Demand
Variable inputs
45. The ability to set the price above the perfectly competitive level
Positive externality
Economies of Scale
Market power
Price elasticity
46. ATC = TC/Q = AFC + AVC
Perfect competition
Average Total Cost (ATC)
Total Revenue
Marginal Cost (MC)
47. Es = (%dQs) / (%dPrice)
Price Elasticity of Supply
Marginal Revenue Product (MRP)
Price Ceiling
Increasing Cost Industry
48. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.
Resources
Marginal Revenue Product (MRP)
Public goods
Productive Efficiency
49. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price
Consumer surplus
Decreasing Cost industry
Producer surplus
Negative externality
50. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary
Constrained Utility Maximization
Cross-Price Elasticity of Demand
Normal Profit
Law of Demand